Digital First Customer Success
The Essentials of Digital-first Customer Success Strategies
What Is Digital-first Customer Success?
How Digital-First Customer Success Can Improve Your Customer Success Management Process
Digital-First Customer Success vs. Customer Service vs. Account Management
Why Digital-First Customer Success Is Transformational
Why Should You Adopt Digital-First Customer Success?
Seven Steps to Automated Customer Success Management
Click to download Totango's editable Customer Journey Map template
Totango SuccessBLOC Scorecard
Totango Customer Data Hub
Monitor and Optimize with Totango
Conclusion: Embrace Digital-first Customer Success to Propel Your Own Success
How to Build & Manage a Customer Success Team
The Importance of a Well-Structured Customer Success Team
Who Makes Up a Customer Success Team?
How is a Customer Success Team Structured?
What Technology Does a CS Team Need?
Achieving Organizational Alignment for Your Customer Success Team
How to Lead a Customer Success Team
How to Scale a Customer Success Team
Best Practices for Enabling Customer Success to Scale
Traits to Look for in a Customer Success Manager
Scalable Coverage Models: A Digital Approach to High Volume Customers
Customer success is the key to building strong customer relationships.
When your brand helps your customers succeed at their goals, they want to continue your relationship. Customer success nurtures the positive experiences of your brand, promoting repeat business and retention.
To appreciate why customer success is so important, it will be helpful to begin with a definition. Customer success occurs when your customers achieve the goals that led them to seek out your product or service. When your brand fails to deliver what your customers sought when they came to you, their experience of your brand falls short of success.
You can define customer success in greater detail by relating it to each stage of your customer’s journey. For example:
The retention stage of the customer journey underscores the importance of customer success. When customers enjoy success throughout their journey with your brand, when they reach the retention stage, they will be inclined to buy from you again and refer your brand to others. On the other hand, failure at any stage can become an impediment to their journey with you, stopping them from becoming repeat buyers and referral sources.
This directly impacts your revenue by affecting your customer lifetime value (CLTV). Your CLTV projects how much your average customer can be expected to spend with you over the course of your relationship with them. Repeat business will increase your CLTV, while customer churn will decrease it. The bottom line is that customer success directly affects your profitability.
Customer success directly relates to your customers’ experience of your brand and their satisfaction with your product. Success during the customer journey leaves customers with a satisfying experience of your brand. Failure promotes dissatisfaction.
You can improve customer success by using technology to promote better experiences of your brand throughout your customer journey. One way to do this is by automating the stages of your customer journey. By defining best practices for each stage, you can create and automate standard procedures to promote positive experiences. For instance, you can standardize your onboarding procedure by creating support materials to guide your customer during the post-purchase process, and set up automated triggers to notify new buyers about how to access the materials.
To ensure optimal implementation of your automated procedures, you can use key performance indicators (KPI’s) to create scorecards that track customer progress through their journey. For example, you can break the onboarding process down into steps and assign each step a numerical weight, yielding a score that reflects how far a customer has progressed towards completion of onboarding. A low score can indicate a customer is at risk of failing to complete onboarding. When this occurs, you can set up your software to automatically take corrective action, such as sending a reminder of the next step the customer should take.
The Totango Spark platform includes modular toolkits called SuccessBLOCs which are templates designed to help you orchestrate this type of strategy. You can select SuccessBLOCs corresponding to the various stages of your customers’ journey. For example, there is a Customer Adoption SuccessBLOC designed to help you promote desired customer actions so that your customers get more value out of your product. There are other modules designed to perform functions such as promoting digital onboarding, detecting and reducing churn risk.
You can also improve the customer experience by using technology to promote a more personalized experience. Analytics technology allows you to integrate data about your customers from different channels into a single database which can be analyzed to segment customers based on their needs. Using automation, your customer success team has the ability to personalize their customer touchpoints at scale, delivering more relevant services to individual customers.
For instance, the Key Account Management SuccessBLOC helps you deliver more personalized attention to your most important accounts. You can use KPIs to track the health of your key accounts, segment accounts meeting specific criteria and trigger automated actions to maintain account health.
By implementing strategies to promote a better customer experience, you can promote higher customer retention rates, translating into higher revenue. Companies that excel at delivering superior customer experience enjoy revenue growth 4% to 8% above their market, according to Bain & Company. Companies that invest in improving customer experience enjoy an 84% increase in revenue, according to Dimension Data.
You can also increase retention by using the automation strategies discussed above to prevent customer churn. Create KPIs to measure churn risk so that you can use a scoring system to segment customers who are at high churn risk and set up automated actions to intervene. For instance, you might define a customer with a high number of support tickets as a churn risk and assign a representative to work with them personally to resolve their concerns. Totango’s Detect Risk SuccessBLOC is designed to help you monitor customer behaviors that signal churn.
The new customer-centered economy favors recurring revenue business models for B2B markets, while favoring partial ownership or subscription models for B2C ones. Most products now have a digital component, making it easier to monitor and understand product use. And customers have raised their expectations, demanding products and services that can be customized to meet their specific desires.
So, what are the most important elements that underpin your strategy for customer success growth in this new economy? Let’s take a look.
In order to retain customers, you need to change your focus from hunting up new customers to keeping the ones you have. Much like an apple orchard, customers must be cultivated. A farmer carefully nurtures each tree, paying attention to its progress and its needs on a daily basis. Think of your customers as being like apple trees that require time and attention in order to yield a harvest.
Retain customers by providing support whenever they’re having trouble with your product or service. Resolving escalations quickly will ensure they continue to receive your product’s value and demonstrate that you care. Never give a customer who’s missed a payment downgraded service, as they may not notice they have lost functionality or may even learn to do without it. Instead, put their subscription on hold. When they are ready to activate their subscription, make sure it’s as easy as clicking “accept” or entering a new credit card number.
If you are working with customers who are ready to churn due to price, an option is to offer them discounts. In the future, you may be able to offer them an upsell. And if a customer does cancel, find out why. Customer success software can generate a ticket that your team can follow-up on in order to retain the customer with some good old-fashioned customer service.
You can quantify customer satisfaction into a score that will help you track progress. Start by implementing a customer feedback program to gather important data and identify unhappy customers. Compiling this information will enable you to spot trends and answer questions. For example, it can help you learn if your nurturing programs are succeeding in improving customer satisfaction. Customer success software makes managing this data and monitoring customer satisfaction scores easier and more organized. Remember to check on a customer’s satisfaction score at key moments along the customer’s journey, such as after onboarding. This will give you an early warning if churn may be on the horizon.
While some attrition can’t be avoided, your company can still reduce churn rates with a few improvements. The key is to offer a product that creates value and to show the customer that they are receiving that value. After customers initially see the value of your product, monitor their usage to be sure that they continue to make the most of it as time goes on. If they are not engaging with certain functionalities, be sure to educate the customer about them. Customers need data that is contextual, intelligent, and comprehensive in order to get the most from your product or service. By making sure customers have a solid understanding of how your product makes a positive difference in their lives, you can prevent customers from ever wanting to churn.
It may be tempting to maximize your harvest in one season; that is, to focus on short-term rewards, such as one highly profitable quarter. But in the long-run, this can be counterproductive; not only will it potentially make your business seem less appealing to shareholders and investors, but customer habits are constantly changing in today’s economy so they require continuous attention. The goal is to nurture customers with care so you can be sure they will spend money at your business for years to come. So, don’t nickel-and-dime them today. Nothing will make a customer churn faster.
It’s best to focus on nurturing the customer relationship over the long-term because having more customer success also means increased revenue. This strategy will ensure you succeed in today’s competitive customer-centered economy.
In a customer-driven economy, your business’s Customer Success teams have a unique opportunity to be a valuable asset in revenue generation. Agour Tzour, Senior Customer Success Manager at Totango, talks about how the traditional structure of revenue generation divided between account managers and customer success teams is inherently flawed for both the company and the customer. Instead, a CS focused framework can provide a better experience for customers.
In this presentation you will learn:
Overall, a value-based approach to revenue generation can be a win-win-win for the customer, the CSM, and the company; with CSM being able to increase revenue generation through providing customers with solutions that CSM managers know can help address customer needs.
Between January and February 2020, Aberdeen surveyed 405 businesses from around the world and across companies of all sizes and industries regarding the key trends and objectives driving their customer experience (CX) programs. To gauge the impact of COVID-19, in May 2020, Aberdeen conducted another survey with 1,719 participants. When asked about the number one goal driving their CX programs, CX leaders participating in both studies cited improving customer retention rates as their top objective. The CX survey has revealed that 31% of organizations currently use a customer success management (CSM – see sidebar) program to achieve their CX goals, including improving customer retention rates.
At its heart, CSM programs are designed for firms to manage primarily post-sale interactions, starting with customer onboarding to retention and loyalty. These programs span all customer interaction channels — and beyond retaining current clientele, they also aim to boost recurring spend and client referrals.
Definition: Data-Driven Customer Success
For the purposes of this research, Aberdeen defines data-driven customer success programs as using a formalized, company-wide customer success program that’s fueled by a holistic view of customer and operational insights used to meet and exceed the changing needs of buyers across all stages of the customer lifecycle.
While CSM programs have initially been adopted more widely by high-tech and media organizations, firms in industries such as financial services, telecommunications, manufacturing, and professional services now also utilize these programs.
Customer and operational insights are key ingredients CX leaders need to build and manage truly data-driven CSM programs, as they allow firms to tailor how they manage each customer journey using the insights related to that client. Firms using such a data-driven customer success program outpace those that don’t in year-over-year (YoY) improvement of several key performance indicators (KPIs) — Figure 1.
Figure 1 shows that firms with a data-driven CSM program enjoy 93% greater annual improvement in customer retention rates (11.8% vs. 6.1%).
It also shows that they observe 94% greater annual improvement in net promoter score (NPS) — a measure used to gauge customer satisfaction (6.6% vs. 3.4%). In general, customers retain their relationship with a business when they are satisfied with their experience interacting with that business. These two metrics reveal that data-driven CSM programs help firms create happy customers who, in turn, reward businesses with their loyalty.
The findings show that data-driven CX leaders not only retain their clientele, but increase their spend over time. This is reflected through the 84% greater annual growth in customer lifetime value observed by these firms (9.2% vs. 5.0%). Customer lifetime value refers to the total spend of a client with a business through the course of their relationship with that business. As such, improving this metric requires firms to retain their clients and simultaneously grow their spend. The success of firms with a data-driven CSM program proves that effective use of data ultimately helps CX leaders better monetize their successful customer relationships.
The financial KPIs depicted in Figure 1 shed more light on the financial benefits of a data-driven customer success program. Data shows that firms with this capability improve (decrease) service costs by 5.1x more year-over-year, compared to those without it (23.9% vs. 4.7%). Such gains in cost decrease are accomplished by establishing a single view of customer and operational insights across all enterprise systems such as CRM, ERP, e-commerce, billing, and marketing automation, which allow firms to hyper-personalize their customer interactions across the entire client lifecycle.
Figure 2 validates the above assertion: Firms with a data-driven CSM program are indeed 45% more likely to establish a single view of customer and operational insights (84% vs. 58%). It also proves that these firms universally adopt hyper-personalization as part of their activities, whereas only 59% of their peers currently use account data to tailor customer interactions.
Another financial benefit of data-driven CSM programs (depicted earlier in this report) is that they enjoy 40% greater year-over-year growth in their annual revenue (13.4% vs. 9.6%).
Such growth in revenue is accomplished through hyper-personalizing interactions across each stage of the customer lifecycle, which maximizes the likelihood that clients renew their spend with the business and share their positive experiences with their friends, family, and colleagues. This, in turn, leads to added revenue through referrals. Happy customers may also buy other products / services over time, which is one of the reasons why firms with data-driven CSM programs observe 2.2x greater annual increase in cross-sell / up-sell revenue (8.9% vs. 4.1%).
While having a unified view of the customer and operational insights is critical for CX leaders to build a truly data-driven CSM program, the success of these programs ultimately hinge on firms’ ability to ‘operationalize’ those insights. This refers to acting on the unified view of customer insights available across various enterprise systems, as this allows firms to maximize their ability to achieve the performance results observed earlier.
To operationalize customer insights, firms must use data in combination with analytics to reveal the inflection points across the customer journeys and determine the root-causes driving those events. For example, using analytics to observe customer data to analyze the journey insights of lost clientele, firms can determine why clients using a specific product are likely to stop doing business. This reveals the root-causes of customer churn for that product and allows firms to address these factors to minimize churn risk. Figure 2 reveals that firms with a data-driven CSM program are 43% more likely to have this capability (83% vs. 58%).
Firms with data-driven customer success programs have seamless integration across all enterprise systems to ensure their views into customer journeys are accurate and timely.
But to benefit from such visibility, firms must focus on operationalizing these insights. Specifically, they must use connected customer insights to hyper-personalize client interactions across all channels and business departments.
CX leaders today are data-rich. However, despite the abundance of data available, many struggle achieving their goals such as retaining their clientele, growing their spend, etc. In fact, data shows that 78% of CX leaders struggle using data to do their jobs. The good news is that despite these challenges, there is a group of organizations that excel in improving their performance across metrics such as customer satisfaction, customer retention, and company revenue. These firms differentiate themselves from their peers by establishing and managing a truly data-driven CSM program.
What makes firms with a data-driven CSM program different than their counterparts? For one, these firms alleviate the problems caused by fragmented customer and operational data. Aberdeen’s February 2020 CX study revealed that 50% of companies use at least 10 channels (e.g., email, web, social media, phone, video, text messaging) to interact with their clients. Companies use multiple systems to capture data across those channels. These systems are often poorly integrated or not integrated at all. Furthermore, CX leaders also often don’t have the systems used in sales, marketing, service, and commerce activities integrated with back-office systems such as billing. This, in turn, results in a disconnect between the customer and operational insights so CX leaders can’t determine if customers are canceling their service because of recurring erroneous billing or because of inefficiencies in sales, marketing, service, or commerce activities.
Data-driven CSM users overcome these challenges by seamlessly integrating customer and operational insights, and then focus on operationalizing them. The latter is equally as important as building a unified view of relevant insights because without acting on relevant data, CX leaders can’t accomplish their goals. The unified insights CX leaders have are only beneficial when they’re used to drive interactions across all stages of the customer lifecycle. Savvy CX leaders recognize the importance of operationalizing their data — they differentiate from their peers by using the unified insights available to them to hyper-personalize their customer interactions.
If you don’t yet have a customer success program, we highly recommend you consider building one using connected customer insights to fuel hyper-personalized interactions with your clientele. This will help you maximize your ability to retain your clients while reducing the cost to serve them and growing your revenue. If you currently have a customer success program but you struggle achieving desired results in customer retention and other KPIs, adopting a data-driven approach such as the one outlined in this report will help you transform your CSM program to one that’s closely aligned with that of Best-in-Class CX leaders.
Since 1988, Aberdeen has published research that helps businesses worldwide to improve their performance. Our analysts derive fact-based, vendor-neutral insights from a proprietary analytical framework, which identifies Best-in-Class organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategies. Aberdeen is headquartered in Waltham, Massachusetts, USA.
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Our increasingly customer-centric economy has established Customer Success as critical to every business’s overall strategy. Any CS team member knows that happy customers make for a thriving enterprise, but the same cannot always be said for C-level executives or your board of directors. Demonstrating the value of Customer Success to executives is crucial. So how do you do build the business case for customer success?
Start by considering what’s most important to your executives. Just as you need to understand your customers to market to them effectively, you need to know what your executives’ top priorities are in order to better communicate with them.
With different roles come different responsibilities and goals. Keep the priorities of the people to whom you are speaking in mind when presenting your business case for customer success and choosing what types of data to share during your presentation.
Another option is to organize your presentation by topic category. This allows you to more comprehensively address a specific company goal or area of interest.
The people you are speaking to and the focus of your meeting will help determine what type of data to include in your presentation. Once that is decided, you will need to decide which specific metrics will be most valuable to discuss within that context.
Sharing data with your executives is how you demonstrate CS is important for your enterprise’s success—but sifting through the noise to pick out only the most valuable data is key to driving the point home. Which of the above data you will include in your presentation and which you will emphasize depends both on your audience and the specific goals you (and they) are working toward. How you present that data also matters.
Presenting your Customer Success data well is important, especially if your presentation will include something like a proposal to change strategies or allocate more resources to the CS department. Throwing raw data at your executives is simply not as effective as presenting a rational business case for customer success with a logical flow that keeps your audience engaged from start to finish.
Some tips for presenting CS data to executives:
Something else to consider: what type of communication is taking place? Is this an in-person meeting, a conference call, an online chat? Different environments create different opportunities and require a unique approach.
Being able to effectively demonstrate the value of Customer Success to your executives helps you garner the upper-level support you need to make progress, both individually and as a team. It also allows you to:
In order to do all of this, it is critical to be able to gather, organize, analyze, and share relevant, up-to-date data effectively. You need to be able to easily access the right data at the right time and share it with the right people—and you need to be able to share it in a way that clearly demonstrates value. Robust Customer Success technology can provide the high level of support and functionality you and your team need to succeed so that your customers—and your company—can likewise enjoy success.
If in this new world your customers must be farmed not hunted, then Customer Success is the farming paradigm. As a concept, Customer Success has been around for just a few years. In fact many business leaders are still unclear on what exactly Customer Success entails. That is why the farming metaphor is useful.
Think of a farmer. While not particularly sophisticated, he maximizes his harvest with simple tasks that he repeats every year. He prepares the soil. He carefully tends to young seedlings. He provides his crop with attention, water, and fertilizer over time in order to ensure that his harvest will be healthy, not only this year, but in years to come. He identifies problems and tests solutions, keeping only what works.
If you think of farming your customers rather than hunting them, then what you know about farming takes on new meaning. Simple repetitive farming tasks become replicable business processes. Tending to new plants becomes onboarding your customers into your product. And all of the things you provide your plants have business equivalents in terms of time, money, and attention. Crucially, when farming the goal is to profit over many years and any single plant will have many crops. This concept of nurturing and a long time horizon is the opposite of hunting with its upfront reward and short term focus. While there are some exceptions, farming is a remarkably robust way to describe Customer Success.
So think of Customer Success as farming your customers.
I was born in a Moshav in Israel, which is basically an agricultural village. My parents were farmers and we grew all sorts of stuff for a living. If you accept farming as a mental model for your business I recommend raising metaphorical trees rather than perennials that die off every year.
I loved the smell of orange blossoms from the trees on the Moshav, so let’s think of your customers as orange trees. When you are growing orange trees, you have an innate understanding for their maturity stages — you need to do different things to them depending on their stage of growth in order to get the most oranges from your grove. Saplings require intensive care until they take root. Young trees have to be watered and fertilized differently than mature trees. When harvest time comes the focus of activities shifts to harvesting. When you identify sick trees you have to move very quickly to nip disease in the bud. In addition, when you plant a tree you expect an annual yield from the tree over multiple years. The work is not a one-time effort and the tree is not a perishable asset.
Customer Success is about treating your customers like trees, nurturing them until they begin to yield a harvest, and then husbanding them for as many seasons as possible.
No single tree will make or break your season, rather it is the sum of profits from all of the trees that matters. Thus, you do need to monitor the overall health of your grove, with its many trees in various stages of growth. This allows you to maximize its yield. And to do this you generally have to apply resources that are limited — your time, water, fertilizer and so on. You should prioritize your time and effort to ensure that no tree is left behind and that you’re focused on every tree and at the grove performance (yield) overall.
In much the same way, implementing a program of Customer Success means managing your overall customer base and making choices about how to apply your limited resources to the segments of customers that will have the greatest benefit to your business, both in terms of current and future revenue, all while ensuring that every customer is provided with appropriate value from your product. The prioritization of work required to do this effectively is a major challenge to all Customer Success organizations.
Have you ever smelled orange blossoms? The scent means that the best time of year is coming — the harvest. Experienced farmers know in advance if the season is going to be normal, great or disappointing. The predictability is a result of the work that has gone on over the course of the year and its impact on the trees — and little can be done to improve the harvest by the time it actually rolls around.
If you have done your work well you will have a bountiful crop — meaning if you have prepared the ground, nurtured the seedlings and carefully nurtured your trees so that they will bear as much fruit as possible.
And if you do the work of nurturing your customers correctly so that they are getting real ongoing value from your product — well then that sort of success has a nice smell too.
The point of all this is not necessarily to maximize your harvest in any one season — in fact it can be counterproductive to do so. Rather, your goal is to maintain a healthy grove and ensure you can continue to harvest from it for years to come. This type of management often involves making tradeoffs between the long term and the short term, which need to be balanced carefully. Your goal as a farmer is to maximize the yield from your grove over time.
In terms of Customer Success, that balance and maximization is embodied in the concept of Customer Lifetime Value, or CLV.
CLV is the sum of the profit you make from your customers over time as opposed to in a single upfront amount. Like an ongoing Profit and Loss statement on a per-customer level, the CLV takes into account how much the customer pays per year (value) less the costs of maintaining them per year (Customer Retention Costs or CRC) and the number of years during which they subscribe to the product.
The goal of Customer Success is to PROACTIVELY IMPACT CLV.